The present invention relates to property management systems and more particularly to techniques for reconciling expenses billed to a tenant and explained on a reconciliation statement provided by a landlord with provisions of a lease agreement and the payments already made by the tenant for those expenses.
Lease agreements for commercial properties generally include provisions that define the amount that a tenant must pay the landlord. This amount is typically broken down into two components: a rent component and an expenses component. The rent component typically comprises payments due at a predetermined interval established in the provisions of the lease agreement (e.g., monthly, quarterly, or annually). The amount of the payments for the rent component may be fixed or may be variable (e.g., based upon a percentage of the tenant's actual sales). The expenses component comprises various operating expenses that the landlord passes on to the tenants. The operating expenses may be difficult to forecast over the duration of the lease agreement, because the operating expenses may vary greatly from year to year and over the period of the lease due to inflation and other factors outside of the control of the landlord. Landlords offset the risk of inflation by passing on some or all of the operating expenses to tenants.
Tenants often pay a substantial portion of their rent under a commercial lease agreement to cover these operating expenses. One type of operating expense that is often billed to tenants is “Common Area Maintenance” (CAM) charges. CAM charges generally cover the landlord's expenses for maintaining and operating common areas shared by multiple tenants of a rental property. CAM expenses are commonly charged to tenants of office buildings and shopping malls, because these types of commercial properties typically include common areas such as lobbies and parking lots that are shared by multiple tenants. For example, a landlord of a shopping mall property may pass on a proportional share of the costs of maintaining the parking lot, building exteriors, and/or other common areas such as hallways and walkways that are shared by all of the tenants to individual tenants. Other operating expenses, such as the cost of property tax, insurance, heating and lighting the property and supplying water, may also be passed on to tenants.
Various formulas are used to calculate a tenant's share of these operating expenses. These formulas are typically complex. In a typical lease agreement, a tenant is required to pay a proportional share of the operating expenses. The methods used to calculate the proportional share also may vary from lease agreement to lease agreement. Tenants have a strong incentive to monitor the amount of expenses that the landlord passes on to them. Large amounts of money are often at stake. For example, large national chain retailer with numerous locations may save millions of dollars per year by scrutinizing and disputing the expenses charged by landlords.
In a typical lease agreement, a tenant may periodically make estimated payments for operating expenses based upon a budget determined by the landlord. At the end of a reconciliation period determined by the lease, the landlord generates a reconciliation statement that provides a calculation of the operating expense charges attributed to the tenant for the current reconciliation period. Typically, the reconciliation periods are one year in length, but the length of a reconciliation period may vary from lease agreement to lease agreement. The reconciliation statement may show a credit for each of the estimated payments made by the tenant for the year and also the difference between the actual expenses incurred by the landlord and the estimated payments made by the tenant. If the estimated payments exceed the actual expenses, the tenant would be entitled to a refund for the amount of the difference. If the actual expenses are more than the estimated payments, then the tenant would owe the different and would be billed for the difference.
The analysis of the reconciliation statement is often complicated by the fact that the statement formats and the calculations used to determine the expenses to be passed on to the tenant are highly variable. Landlords may also change the format of reconciliation statements from year to year as well as the calculations used to determine tenants' proportional share of the expenses. Thus, year-to-year comparison of reconciliation statements by the tenant is a difficult task. Due to this it becomes difficult for the tenant to uncover unexpectedly large increases in some of the expenses that the landlord passes on to the tenant.
Further complicating the analysis of the reconciliation statement, tenants typically work from paper files and calculators and/or create spreadsheets to double-check the calculations performed by the landlord. These manual processes are inefficient and time-consuming, and comparison of reconciliation data from year to year or from property to property is very difficult.
Accordingly, techniques for facilitating more efficient and accurate reconciliation processing are desired.